Dollars and Dreams: the Changing American Income Distribution. - book reviews

Washington Monthly, Jan, 1988 by Mickey Kaus

Dollars and Dreams: The Changing American Income Distribution.

Frank Levy. Russell Sage. $27.50. Frank Levy has immersed himself in Census data and emerged with a depressing but significant story to tell: America has indeed been quietly slipping backwards for over a decade. In 1973, the average 40-year-old man earned $28,118 (in constant 1984 dollars). Ten years later, at age 50, he was making only $24,132. Meanwhile, the 40-year-olds of 1984 were earning even less--about 17 percent less than the 40-year-olds of 1973. Looking at these figures, you wonder not why there has been so much political "malaise" (to coin a phrase) since 1973, but why there hasn't been a revolution.

The reason is that the decline in individual earnings was masked by the well-known entry of second earners into the work force, so that family income didn't decline as rapidly. Even so, the proportion of husband-wife families making over $30,000, when corrected for inflation, declined from 51 percent in 1973 to 45 percent in 1984. Americans had a reason for suspecting that, despite Walkmen and microwave ovens, they weren't living as well as their parents had lived in the sixties. They weren't.

Does this mean the middle class is disappearing? Not if you define "middle class" as whoever is in the middle. The middle is still by far the fattest part of the income distribution. But because everyone slipped backwards, "being in the middle of the distribution" no longer guarantees that you could buy the things you once thought "middle class" people could buy.

There has been a small increase in inequality to go with the overall stagnation of earnings. But it was the stagnation, Levy argues, that made the inequality seem ominous. When the whole train is moving forward, people don't worry so much whether they are in the first or last car. It's when the train stops that it becomes very important to get away from the caboose. Incomes have always been unequal. But without growth and upward mobility, people suddenly feel locked in at their level. "Inequality of prospects" rises more rapidly than actual money inequality.

And whether there's more inequality or less, Levy notes, there is good reason to lament the loss of industrial jobs that pay high wages without demanding the technical training of a software-programmer or the smooth interpersonal skills of a marketing rep. It's one thing to have inequality of income; it's another to have inequality based rigorously on skills or credentials. That gives the whole income distribution a nasty meritocratic bite--smart people in the upper quintiles, dummies down below.

Scattered throughout Levy's book are surprising, and sometimes profoundly distressing statistics. One of the latter is the black male adult unemployment rate in 1968-69. It was 3.8 percent. Today, it is 10.2 percent. Yet liberals who recite these depressing economic trends, as if they automatically reflect discrimination, might note that three-quarters of black husband and wife families now have incomes that put them in the top three quintiles, a major success story. Unfortunately, most black children are not being born into such husband-wife families.

Levy is not a polemicist, though sometimes you wish he were. He tells his story calmly and clearly, with a minimum of jargon. Dollars and Dreams deserves a larger audience than books about statistics generally get. As it is, Levy is probably doomed to see his carefully explained numbers distorted by speechwriters and editorialists for years to come.